Its trade is the size of the economy of countries, and its success will bring about an important development in the e-commerce market, but its failure will constitute an economic setback and negative propaganda that cannot be easily corrected, and it came to dominate and acquire and not share, this is how some economists summarized the emergence of the “Amazon” company in Egypt recently.
As is the case with senior visitors, the Egyptian Prime Minister, Mostafa Madbouly, and a number of ministers and officials witnessed, last Tuesday, the opening of the Amazon warehouse in the "Tenth of Ramadan" city, Sharkia Governorate, north of Cairo.
The giant company - the pioneer in e-commerce - invests more than one billion pounds in Egypt (about 63 million dollars), provides more than 3,000 jobs, and owns more than 15 delivery stations nationwide, according to a statement by the Presidency of the Council of Ministers.
The warehouse area is 28 thousand square meters, and is the first of its kind in Africa.
According to company officials, this is only the beginning in the company's endeavor to expand its operations and commercial activity to include all parts of the region.
The company, although indirectly present in Egypt more than 4 years ago, by acquiring Souq.com, the largest e-commerce platform in the Middle East, for $650 million in March 2017, is now present directly after it was announced on the company’s website. Souq.. Stay Amazon."
The Egyptian market ranks first in terms of Amazon’s investments in the African continent, and the company aims to provide a faster online shopping and delivery experience, and it will facilitate the provision of more products to a larger segment of customers in Egypt, according to Ronaldo Mouchawar, Vice President of the company for the Middle East and North Africa.
Amazon dream and nightmare
These rosy statements are not the whole story, as the giant entrant did not come to share the shares of others in online sales, where there are relatively large shopping platforms such as “Jumia” and “Noon”, in addition to the platforms of shopping malls and other electronic companies, but came in order to obtain a share The lion in that trade in which he excelled with distinction, and has the strength to bear any expenses or expenses without profits for a long time.
Which also means that the future of many owners of small and medium enterprises may be at stake, or the trade of some small sellers on social media platforms may be damaged in favor of the large company, according to economists who spoke to Al Jazeera Net.
Financial market expert Dr. Wael Al-Nahhas said, “Amazon’s entry into the Egyptian market is a positive thing, but it may harm small merchants who rely on social media platforms to promote their goods and products, but the government should use its presence to promote its projects, such as the Furniture City, Al-Rubiki Leather City, and others, and present all its products to the world.” ".
Al-Nahhas warned - in statements to Al-Jazeera Net - that the matter would turn into bad propaganda for the Egyptian economy, if the giant company was dealt with in a bureaucratic manner of small employees, because it is a "trillion" company that needs to be dealt with professionally in order to constitute positive - not negative - publicity. for the country.
Al-Nahhas stressed the need to exploit the company in concluding commercial contracts to promote and display Egyptian products to be Egypt's gateway to the world, taking into account the damage to a segment of small sellers who do not have the competitive ability of the giant company.
Obstacles to Amazon
However, the nature of the Egyptian market may not allow for a quick and easy control of the Amazon company because it is unregulated, in addition to the spread of informal sellers on social networking sites, as they are the ones who monopolize selling in the governorates outside the cities of Cairo and Alexandria due to the lack of credit or prepaid cards for many in Rurales of the Delta and Upper Egypt.
The owner of the "Baby Shark" store for selling children's clothes, which has a page on the social networking site, says that a few years ago, the only way to sell in the governorate was shops, but personal pages have appeared over the past years that have gained people's satisfaction and trust.
Speaking to Al Jazeera Net, Ihab Fawzy, who holds a Bachelor of Arts, explained that the majority still believe in seeing the product and examining it first, and they do not have financial cards to buy online and prefer to pay in cash, in addition to that some are not good at dealing with electronic platforms.
Indeed, the figures of the National Bank of Egypt - the largest local bank in Egypt, which accounts for 60% of the volume of e-commerce in the Egyptian market - reveal that the number of smart wallets, or credit cards, is not large.
The CEO of retail banking and branches at the National Bank of Egypt, Karim Sous, said in press statements that the number of wallets with the “Fon Cash” service was 1.7 million electronic wallets, and the number of credit cards was 1.37 million by the end of last June.
Spending on e-commerce increased as a result of the outbreak of the Corona virus and the subsequent preventive closure measures imposed by world governments, and in this regard, the expectations of the “Economy 2021” report issued by “MasterCard” indicated that 20 to 30% of the increase in spending on e-commerce was associated with the outbreak of the virus. It will remain a permanent trend in the share of total spending of the global retail sector.
The volume of e-commerce in Egypt
The door is still open, and the size of the e-commerce market is in its first phase. The head of the Communications Committee of the Egyptian Youth Business Association, Eng. Sherif Makhlouf, believes that the volume of e-commerce in Egypt has grown significantly, and that it is the future version of commerce in its current form.
The growth of e-commerce is also encouraged by the growing number of Internet users via mobile, reaching 52.40 million users, according to the Communications and Information Technology Indicators Bulletin last April.
The Egyptian government believes in the future of e-commerce, as Ramy Youssef, advisor to the Minister of Finance for international taxes and development, believes that "it has become a reality, and it is considered the future towards which the world is heading, and individuals and governments coexist with it, and dealing with it includes many aspects, such as information technology and tax and financial aspects."
E-commerce, which amounts to about 34 billion pounds, represents less than 3% of the volume of internal trade in Egypt, which amounts to 1.2 trillion pounds (about 82 billion dollars) and contributes to a fifth of the gross domestic product.
Monopoly Fears
The economist and head of the Development and Value-Added Forum, Dr. Ahmed Khuzaym, considered that "the Egyptian e-commerce market is a promising and steadily growing market, but the possibilities of Amazon's dominance exist and previous experiences in other countries of the world confirm this."
And he saw - in his speech to Al Jazeera Net - that the danger lies in the developing countries becoming a market for displaying foreign products at competitive prices and offers that lead to stagnation or decline in Egyptian products instead of increasing them;
Because they are non-producing consumer countries.
He pointed out that major transnational companies are governed by their personal interests in the first place, and there is no objection to the state's approach to imposing or collecting value-added tax on products and goods sold through their website as a matter of protection and compensation to the state treasury.
The Egyptian government seeks to achieve as much as possible from the growth of e-commerce by imposing a value-added tax (14%), as value-added tax and income tax are among the most important public tax resources of the Egyptian state.
The Director of Taxpayer Service at the Tax Authority, Dr. Mohsen Al-Jayar, confirmed that e-commerce is subject to a value-added tax of 14% in accordance with the value-added tax law and the unified tax procedures law.